Session One | Session Two | Session Three | Session Four | Session Five | Session Six | Session Seven Session Eight | Session Nine | Session Ten | Session Eleven
The 2016 APRU Digital Economy Summer Seminar convened from August 22nd to August 26th at the Mita Campus of Keio University in downtown Tokyo. The Seminar was attended by 16 APRU Digital Economy Summer Seminar Fellows representing eight governments in the the Asia Pacific region including Japan, China, Korea, the United States, Hong Kong, Vietnam, Indonesia, and Malaysia.
Over 25 APRU university-affiliated Faculty participated in the Seminar, including Japan (Keio University, Waseda University, Tokyo University, Nagoya University, Kyoto University and Kyushu University), Korea (Yonsei University, the Korea Advanced Institute of Technology, and Korea University), China (Tsinghua University and Beijing Normal University), Australia (University of New South Wales), the United States (Stanford University, University of California – San Diego, Samford University, Carnegie Mellon University and American University), Malaysia (University of Malaya), Indonesia (University of Indonesia), and India (Indian Institute of Technology – Hyderabad).
Representatives from The Aspen Institute, The Association of Pacific Rim Universities (APRU), NTT Corporation, Biz Mobile, the Japan Network Information Center (JPNIC), the Internet Corporation for Assigning Names and Numbers (ICANN), and Google also attended.
Over the five days of the Summer Seminar, the APRU Faculty and Fellows held intensive and wide-ranging discussions concerning the present and future of the Digital Economy in the Asia Pacific region. The Seminar was held under Chatham House rules. The report below highlights, without attribution, the exchanges that took place between APRU Faculty and Fellows across 11 substantive sessions and an evening panel discussion featuring the pioneers who brought the Internet to the Asia Pacific region over 25 years ago. The reports begins with a listing of the key takeaways from the Seminar that will guide our future research and advocacy efforts.
The 2016 APRU Digital Economy Summer Seminar was the second in what we hope will become an annual program that brings together APRU academic experts in key Internet-related policy disciplines and mid-career government officials who will supporting the future growth and innovation of the Digital Economy in the Asia Pacific region.
1| The history of the emergence and growth of the Internet in the Asia Pacific region has taught us:
- Technologically advanced and well-funded research does not always win out over flexible solution which have the potential to be more widely shared.
- Governments can best contribute to innovation by allowing experimentation and curbing excessive regulation
- Collaboration among researchers and across countries on new technologies and services rather than adversarial competition produces greater progress
- Individuals ready to take personal and professional risks to explore new opportunities are a critical element for progress and success.
2| With the increasingly rapid deployment of IoT devices, adapting legal systems to a new world where e-commerce involves data flows, financial transactions and the real-time availability of logistical information remains a critical challenge. There are concerns that nation-states may not be flexible enough to respond to the needs of businesses and consumers. It has been observed that major players in the private sector may need to work together to create a new set of norms and processes until legal systems catches up with this new reality.
3| IoT is not just sensor technology, but rather a system of connected devices that come together to produce devices that support diverse and more comfortable lifestyles, such as driver-less cars, phones that serve as personal assistants, and homes. Both the artificial intelligence linking these systems together and the companies that provide these services will be increasingly vertically integrated and operate globally. In such a complex digital economic environment, preserving the innovation, competition and entrepreneurship that has shaped the Internet over the past 20 years into the next several decades will prove challenging.
4| While privacy regulation is crucial to the development of the Digital Economy, such laws should best be laid out as a set of basic principles rather than codified into a detailed, prescriptive list of permitted and prohibited activities. The rapid pace of the technology means that data protection authorities should be able to provide enforcement through specific guidance to companies as well as assurances to individuals with respect to how evolving aspects of digital technologies and the data associated with them might best be pursued.
5| There are no quick fixes to the growing threats to our cyber security. Indeed, the current architecture of Internet may necessitate fundamental changes requiring time, money and enhanced international collaboration. In the meantime, vulnerability identification, information sharing, and increased attention to cyber dialogues directed to building a consensus on international normswith respect to cyberspace among all stakeholders, capacity building in the private sector, and the generation of greater public awareness and digital literacy are all crucial.
6| Efforts directed to reducing the Digital Divide should not result in the exacerbation of income inequality. At the same time, the introduction of data localization requirements or tax policies which may appear to support local development can also raise the price of innovation and reduce access to global markets and the capital crucial to the growth of local Digital Economies. As such, the balance between infrastructure expansion and utilization is also critical. This will require long term efforts to change the attitudes and work cultures of underprivileged populations such that they can grasp how access to technology can change their lives and those of their children.
7| Questions of consumer rights, network security and integrity, as well as filtering remain key issues in Asian countries, although the major focus remains on expanding connectivity. Malaysia has regulations setting standards for content and Vietnam has introduced a network security law. In Japan, the police monitor messaging and sites connected with youth suicide and violence, raising questions as to the extent private companies are obligated to enable law enforcement access to consumer information.
8| Open source software promotes standards, interoperability and quicker moves to scale, ultimately driving greater innovation. However, a key challenge, especially as millions of low-cost IoT devices are deployed in the coming years, is the documentation and security of this software. The nature of open source software is that is poses an increasingly serious threat to the integrity of our systems and technology as it becomes ever more deeply embedded into the fabric of the Digital Economy.
9| Traditional standards-making and legal processes may prove too inflexible to handle many new questions associated with the anticipated rapid deployments of IoT and associate AI. In particular, driver-less cars will present a unique combination of issues related to standardization, interoperability and competition in the global marketplace. New regulatory mechanisms and greater attention to ensuring that Asian concerns and needs are adequately projected and reflected in the global discussion are necessary when addressing the management of these new technologies.
10| Policymakers in the developing world are often worried that much of the value of these data flows is captured outside their jurisdictions. That said, borders are no longer as relevant as they were during the Industrial Economy. Digital technologies bypass national authorities while the scale-driven economics of the Internet are increasingly driving cross-border and vertical integration. If countries and their people are to realize the full potential of the new Digital Economy, politics must catch up with technology,.
11| The UN-based Internet Government Forum (IGF) process must be improved through encouraging better policy analysis and the convening of inter-sessional meetings and working groups to help build and lead discussion on complex and controversial issues. Efforts should also go to reducing the silo effect of dividing up the community into civil society, the technical community (where academics are also generally assigned) and the private sector. While governments and international organizations have the main responsibility for public policy implementation to keep the Internet stable and secure, all stakeholders should have a role in contributing to the future development of the Internet.
12| TPP, if ratified, will be an important step forward for the Digital digitEconomy in the region. It is an important milestone to developing a regional framework to promote digital trade and will create precedents in many areas that will allow us to do more over time. TPP and the closely associated TTIP (Transatlantic Trade and Investment Partnership) are both elements of a global process to address the many structural changes associated with Digital Economies. Placing al trade in the same category as other trade issues, including agriculture, has allowed the negotiators to build necessary compromises across a number of trade-related economic sectors.
13| Asian involvement in Internet governance circles is currently limited and the centers of scholarship and policy analysis on the Digital Economy are largely outside the region. For that reason, a great deal will depend on the capacity of the next generation of Asians to develop and articulate a compelling vision of the future of the Digital Economy. Doing so requires a deeper appreciation for the many challenges to the integrity of the Internet in policy areas, such as personal information and the management of cyber space, and in supporting greater research and championing wise policies in key areas of the future Digital Economy including health, education, manufacturing and financial services. Programs such as the APRU Digital Economy Summer Seminar are vital for the development of policy perspective and the skills required for the Asia’s digital community to participate actively and constructively in the global discussion on the future of the Digital Economy.
The Digital Economy in the Asia Pacific
Facilitators: Dr. Robert Pepper (The Aspen Institute), Professor Dave Farber (Carnegie Mellon University) and Professor Hong Xue (Beijing Normal University).
The discussion focused on the numbers that serve as benchmarks for the transition to the Digital Economy. By 2020, it is estimated that there will be 26 billion devices connected to the Internet and the Internet of Things, reshaping key sectors of the regional economy from entertainment to healthcare to manufacturing. In the expanding Digital Economy of the Asia Pacific region, information technologies and consumer-oriented technology will be further transformed by new operational technologies (OT) that will run factories and take charge of logistical systems.
The Internet could be as pervasive as electricity and have an equally profound effect on lifestyles. Major challenges include the related issues of sustainable development and addressing the digital divide. IoT can potentially improve the lives of billions around the world, but may also further exacerbate the differences between advanced economies and developing countries not well positioned to absorb yet another wave of technology. For advanced societies, a key problem is the adaptation of legal systems that take into account a new world where e-commerce involves not just the exchange of goods but data flows, financial transactions and real-time availability of logistical information. If nation-states are unable to respond quickly enough to the needs of businesses and consumers in this area, major players in the private sector may have to jump ahead of governments to create new norms and processes until national legal systems can catch up.
It was also observed that an entire revamping of the technology underlying the Internet may be necessary to make the system more secure and resilient, particularly at the user level. Comments from a number of APRU Fellows highlighted additional concerns, especially the challenge of supporting SMEs and creating an environment that encourages entrepreneurship as well as policies that can focus on bringing traditional communities into the Digital Economy. In this context, there was also discussion as to how to manage the disappearance of industrial jobs in countries where the industrial revolution is just beginning.
New Technologies Driving Growth and Innovation in Asia
Facilitators: Professor Richard Dasher (Stanford University), Professor Kilnam Chon (KAIST), Professor Xing Li (Tsinghua University) and Professor Jung-Hoon Lee (Yonsei University)
IoT is not just sensor technology, but a system of connected devices that come together to produce driver-less cars, phones that serve as personal assistants, and homes that support diverse and more comfortable lifestyles. Artificial intelligence will be linking systems together and companies that provide these services will be increasingly vertically integrated and operate globally. The challenge will be how to preserve the innovation, competition and entrepreneurship that has driven innovation on the Internet over the past 20 years into the next decades. Smart cities that bring together technologies and augment innovation were posited as likely to emerge as key incubators for the next generation of devices and services.
A forecast was made that cycles of cooperation and competition among China, Korea and Japan will produce a new center for driving change in the global Digital Economy. This raised questions regarding the role of governments and large legacy telecoms’ presence in this process, since they will be key players as countries seek to deploy new technologies and build the commercial basis for the new Digital Economy. There was agreement that much will depend on the aspirations and function of new generations of users as well as the provision of opportunities for greater labor mobility so that human resources can be mobilized most efficiently.
Evening Discussion: The Origins of the Internet in Asia & its Future
Discussants: Professor Jiro Kokuryo (Keio University), Professor Xing Li (Tsinghua University), Professor Dave Farber (Carnegie Mellon University), Dr. Robert Pepper (The Aspen Institute), Professor Kilnam Chon (KAIST) and Akinori Maemura (JPNIC)
Some of the insights coming from this oral history of the Internet in the region included
- Technologically advanced and better funded research does not always win out over flexible solutions that can be more widely shared.
- Governments often can best contribute to innovation by allowing experimentation and avoiding excessive regulation.
- Collaboration rather than adversarial competition among researchers and across countries on new technologies and services is often the surer path to progress.
- Individuals ready to take personal and professional risks to explore new opportunities are a critical element for progress and success.
Protecting Cyber-Privacy and Guarding Cyber-Security
Facilitators: Professor Abu Bakar Munir (University of Malaya), Professor Nohyoung Park (Korea University) and Yoshihiro Obata (CEO, Bizmobile).
The discussion was divided into two parts and centered on the related topics of privacy and cyber security. The exchange on privacy took up the challenge of protecting personal information amidst the technological advances associated with cloud computing and the Internet of Things (IoT) and the related question of how data can be responsibly shared and utilized for commercial purposes. Currently, some 110 countries around the world have regulations governing the protection of personal data. A new legal framework will soon be introduced in Indonesia while China is in the process of examining how better to protect and share data for commercial transactions. However, despite the web of global regulation, many issues remain unresolved and there are deep concerns as to whether personal data is adequately or transparently protected by governments and firms.
As a result, there is a movement, as seen most prominently in Europe, to introduce controversial new rules, such as the “right to be forgotten”, which may undercut the innovation and global connectivity associated with the development of the Digital Economy. Public concerns about recent massive data breaches in Korea have resulted in a tightening of the conditions under which data might be transferred. This potentially could pose a critical obstacle to the further growth of cloud computing there.
The group agreed that while privacy regulation is clearly crucial to the future development of the Digital Economy, new laws should be founded on a set of basic principles rather than on a detailed prescriptive list of permitted and prohibited activities. In this case, the role of the data protection authorities such as the American Federal Trade Commission (FTC), should be to enforce privacy regulations by providing specific guidance to companies and assurance to individuals with regard to how evolving aspects of digital technologies and the data associated with them might best be pursued.
The exchange in the second half of the session on cyber security opened with the observation that protecting government, corporate and personal devices and data is an increasingly difficult task in an Internet environment characterized by open systems, millions of servers, and sophisticated criminal and terrorist organizations. As more IoT is deployed, the challenge will become even greater. For example, driverless car technology is inadequately secured and future progress of this new industry critically depends on such security.
There are no quick fixes, especially because the current architecture of Internet likely requires some fundamental revisions to make it more secure, which will take time and international collaboration. In the meantime, existing vulnerabilities need to be identified, the information widely shared, and increased attention given to cyber dialogues that can foster a consensus on international norms with respect to cyberspace, to the need for greater investment and capacity building in the private sector, and to supporting greater public awareness and digital literacy. Cyber criminals are continuously improving and a global effort is needed to oppose them.
Potential areas for progress and further discussion in promoting a larger global effort can be found in the ISO/EIC 27000 series on securing cloud computing, discussions by the UN’s First Committee and confidence-building measures among countries with respect to their cyber capabilities and intentions. New advances in data-centric computing will also allow for the development of faster and more cost-efficient processing solutions which can in turn support more resilient and secure computing environments.
Bridging the Digital Divide: More than Just Infrastructure
Facilitators: Professor Yudho Sucahyo (University of Indonesia) and Dr. Robert Pepper (The Aspen Institute).
Session IV was a broadly based and generally optimistic discussion on the challenges associated with the digital divide in the Asia Pacific region. The big concern remains how to bring online the billions of people that do not have access to Internet infrastructure and devices. This is a particularly acute problem in an era where Internet technologies are central to economic development.
Indonesia is taking a number of innovative approaches to both bring the Internet to remote and under-developed parts of the country and promote entrepreneurship that can spur greater utilization of the existing infrastructure and opportunities. The ride-sharing service Gojek is Indonesia’s first US billion-dollar valuation unicorn, and many other services, such as Traveloka, are on the way. Greater attention to Internet governance issues through forums as well as encouragement greater public feedback and involvement with the Internet have aided this process.
Efforts directed to reducing the digital divide should not end up creating new sets of income inequalities, especially through the introduction of data localization requirements or tax policies that while appearing to support local development can raise the price of innovation and reduce access to global markets and capital that are crucial to the growth of local Digital Economies. A related consideration is to achieve a proper balance between infrastructure build-out and utilization. The latter is important since it requires long term efforts to change attitudes and work cultures of less advantaged populations so they can grasp how access to technology can change their lives and the lives of their children.
Promoting connectivity to schools and hospitals must remain a top priority. In countries like Vietnam, mobile-based game applications often provide the first impulse for the younger generation and their families to connect with each other and the world. While the challenge of bringing the next billion into the Digital Economy is significant, we remain confident that we are cognizant of the obstacles facing the Asia Pacific region and can move forward to address them.
User Access and Filtering: Getting the Balance Right
Facilitators: Professor Woodward Hartzog (Samford University), Adjunct Professor James Miller (American University) and Professor Kilnam Chon (KAIST).
The session began with the question of whether or not Internet access is a human right. It was observed that this was both an issue of connectivity as well as the type of content permitted on the Internet which further touches on freedom of expression. There are various reasons for limiting Internet content: cultural sensitivities, national security and political dissent. In turn, this raises the issue (e.g. in the case of child pornography) of whether certain websites should be de-listed and through what process these decisions should be made. Concern was expressed regarding how much power governments and the ISPs should be permitted in this area. In the US, for example, ISPs have been authorized under the Digital Millennium Copyright Act (DCMA) to take down content that infringes on copyright when complaints are presented to them by the rights holder.
Related to the filtering is the broader question of network management for traffic congestion. The various methodologies network managers employ to protect networks may not be optimized for content consumption, raising complex questions of network capabilities and cost management. Both have implications for individual access to the Internet and the ability of companies to offer increasingly innovative and bandwidth hungry services.
One recent example has been congestion caused in Japan by downloads and updates of the Windows 10 operating system. Transparency and equity in these management solutions are issues that are likely to become more controversial as video replaces text in peer to peer communications and in the delivery of advertising and e-commerce services.
There will also be tradeoffs as the private sector takes steps to make their services more widely available to subscribers through the use of balloons (Google), drones (Facebook) and satellites (SpaceX). New business models, such as Facebook’s Free Basics, have also been controversial from the perspective of network neutrality.
Questions of consumer rights, network security and integrity and filtering are key issues in Asian countries, although the major focus remains on expanding connectivity. Malaysia has regulation standards for content and Vietnam has introduced a network security law. In Japan, the police have become involved in monitoring messaging and sites connected with youth suicide and violence, raising questions as to the extent private companies are obligated to enable law enforcement access to consumer information.
In many countries, users are incredibly sensitive regarding access to personal information online. Recently in Australia, despite a clear legislative mandate allowing the government to request census data for the purposes of government administration and budgeting, there has been controversy over the government’s collection of citizen census data online. Many citizens remain mistrusting of the Internet as a means of collecting and analyzing data, and suspicion exists that any data on the Internet is open to manipulation by governments and ISPs.
New Business Models for the Digital Economy
Facilitators: Professor Richard Dasher (Stanford University), Professor Kan Suzuki (Keio University), Masanobu Katoh (Intellectual Ventures Japan) and Professor Hong Xue (Beijing Normal University).
The session kicked off with a discussion of “What is content?” For example, is Uber a content provider or a taxi service? Is crowd-sourcing an innovative way of raising finance or a place for testing the market of ideas? Are traditional types of intellectual property like patents also content?
Universities only make money from a few of the thousands of patents that they file each year, yet patents are critical since they help support the university’s function of creating and sharing knowledge. In industry, the role of patents and copyrights has changed over time. Many of the largest companies today gain patents and other intellectual property not only through their own research and development efforts but also through mergers and acquisitions of existing companies and start-ups. It is a different approach to innovation that has both positive and negative elements.
Concern was voiced that the current patent and copyright system in many countries is a 19th century solution applied to 21st century problems. In Japan, for example, fees to support the music and motion picture industry are collected from taxes on electronic devices, such as CD and DVD players, and then shared with creators and production companies. However, smartphones have upended the market and greatly limited revenues from this source. Debate in Japan continues over what should replace it.
Similarly, attempts to divide the world into regional blocs for licensing content as well as the selective streaming of content by global distributors have been unsuccessful for business and technical reasons. Piracy of content remains an enormous challenge for the music and gaming industries. Yet, new subscription models introduced by major players, such as Apple and Netflix, may be cutting into this problem. Young people, in particular, are part of both the problem and the solution, and business strategies that have made content easy to access and affordable have found success.
Outside the entertainment industry, methods for protecting intellectual property are vital. Google may provide free search services based on its advertising model, but it has protections in place for its search methodologies and its advertising engine. Creative Commons makes available intellectual property for “free”, but it does so on licensing terms that make clear that only “non-commercial” use is permitted without the payment of royalties. Intel’s microprocessor technology is proprietary, but conversely, it has become the dominant player in the market by providing open interfaces for connecting to and innovating on this hardware.
Permission-less innovation is not necessarily contradicted by respect for and use of intellectually property law. Chapter 18 of the TPP agreement is clear that limitations and exceptions are allowed for the use of intellectual property in the public interest. Recently, both Singapore and Korea have been opening up opportunities for the fair use of intellectual property under certain conditions while China and Hong Kong are examining similar possibilities. Furthermore, technology is clearly moving towards greater flexibility in this area as evidenced by real-time screening of content from personal smartphones during the Rio Olympics.
Open source software presents a conundrum. Proponents argue that open source software promotes standards, interoperability and quicker moves to scale, ultimately resulting in greater innovation. However, as millions of low-cost IoT devices are deployed in the coming years, documentation and security of this software remains an important challenge. Are we leaving ourselves open to serious threats to the security of our systems and technology as open source software becomes ever more deeply embedded into the fabric of the digital economy? Governments, businesses and the broader digital community must address this problem.
Standards, Interoperability and Competition in the Digital Economy
Facilitators:Professor Peter Cowhey (University of California, San Diego), Professor Toshiya Jitsuzumi (Kyushu University), Makoto Yokozawa (Kyoto University) and Professor Leon Trakman (University of New South Wales).
The session was appropriately launched with the remark that many of the challenges now confronting the Digital Economy have already been dealt with in other policy areas. Across industries and economies, there has always been a rich debate about the development and enforcement of standards and their impact upon innovation. In the US, the debate has often revolved around the need to guarantee openness on the edges of new technologies and the importance of maintaining interoperability.
Data sharing is part of this discussion. Most recently, this has manifested as the question of whether or not companies like Google and Uber should be required to share traffic management information with governments and others. In this perspective, competition policy might be viewed as a tool rather than an end in and of itself, with consumer welfare being only part of the equation. In the Digital Economy, the more consumers that use a service, like Facebook, the more valuable and useful that service becomes. In Japan, the size of a company, such as NTT, need not be an issue. In the early days of Japan’s Internet, NTT was a very important platform for serving public and commercial interests in creating the kind of world-class infrastructure fundamental to the growth of the Digital Economy. Search engines are another service that may be analyzed from this standpoint.
A key question is how to ensure competition in the last mile of service delivery so as to avoid consumer lock-in.This is an issue for both the telecom industry and for new technologies such as cloud computing. How do we relate standardization and competition issues to actual business situations? This process is now occurring within the development of the fin-tech industry. Old standards revolving around bank transfer fees are now giving way to the introduction of block-chain technologies. The mobile industry is another example; multiple standards (e.g. GSM and CDMA) existed side by side for a period of time before a resolution emerged that balanced consumer welfare, commercial interests and the requirement for continuing innovation.
Looking at the interrelationships between standards, interoperability and competition, all relevant players must be involved. The legal profession must better communicate with the technical community and businesses so that existing legal frameworks can be updated in ways that keep them relevant to new market realities. The work of the Internet Engineering Task Force (IETF) in developing standards for the Internet is an example of the kind of expertise and openness to a wide range of stakeholders the dynamic nature of Digital Economy requires.
Evolving such forms of cross-sector and cross-national cooperation is an urgent priority if we are to address the many new issues that are emerging in connection with the deployment of IoT. The traditional standards-making and legal processes are not sufficient. The advent of driver-less cars presents a unique combination of issues related to standardization, interoperability and competition in the global marketplace. Such technologies will require that new mechanisms and institutions be developed to ensure that the interests of all parties are adequately projected and reflected in any regulatory process.
The Digital Economy is entering a very dynamic and competitive phase with the likelihood of dramatic disruptions in the value-added areas of many traditional market sectors. Automobiles are one example, but agriculture, especially in Asia, is a close second. Companies entering these sectors will be financing their efforts from revenue streams connected with other aspects of their operations, creating very complex, competitive patterns. While Google is not an automobile company, it has the deep technological and financial resources that the current automotive industry needs and may not be able to match competitively.
Rethinking the Basic Architecture of the Internet in Asia: The Problem of Fragmentation
Facilitators: Professor David Farber (Carnegie Mellon University), Professor Uday Desai (India Institute Technology at Hyderabad) and Dr. Robert Pepper (The Aspen Institute).
The exchange began with the observation that fragmentation can be seen everywhere across the Internet in Asia. Methods of protecting intellectual property can be obstacles to the free flow of information across networks in addition to misguided efforts by governments to secure information by disconnecting their internal systems from the broader Internet. From a technological perspective, these roadblocks are difficult to maintain and they often reduce the efficiency and scale of the Internet while also creating new areas of tensions.
Data shows that the openness and global connectivity provided by the Internet directly correlates with GDP growth. Local data storage requirements that freeze data in place are technically impractical and economically damaging. Information does not follow national borders and Internet routing is based on maximizing efficiency and security as opposed to abiding by political preferences. Credit card payment systems and the data monitoring international air traffic are both examples.
While some limitation on the free flow of date for law enforcement or security purposes are necessary, they should be crafted around five major principles:
1| Minimizing fragmentation through the least restrictive measures possible
2| Setting clear goals for policies
3| Coordinating globally to manage jurisdictional conflicts
4| Undertaking careful cost/benefit analysis
5| Adhering to existing trade and other treaty obligations.
The advent of IoT will make the world more connected, but could paradoxically also contribute to further fragmentation. Since residential ICT will be a large part of the deployment, homeowners will be naturally resistant to sharing their information with the network. Yet this area of restricted access might be accommodated creatively within the broader network through the use of new technologies. Over time, the global Internet may come to resemble a mosaic of smaller “intranets” that collectively preserve the integrity of the global Internet. Servicing this new field can provide new growth opportunities for big companies and startups alike.
The challenge is how we deal with the positions taken by large, developing countries like Indonesia that see certain requirements to localize the storage of data as an integral part of their economic development plans. Policymakers in these countries understand the importance to their economies of the free flow of data, but are also concerned that much of the value of these data flows is captured elsewhere. Furthermore, the protection of personal data is also a sensitive political and social issues in many countries, although better alternatives to current forms of protection, such as encryption, exist.
In the end, this may be more a question of politics catching up with technology. An often heard and sometimes persuasive argument is that if a country has customs and immigration controls at borders, cyber controls are adequate equivalents. The answer is that borders ar no longer as relevant in the emerging Digital Economy as they were during the Industrial Economy. Digital technologies bypass borders and the scale-driven economics of the Internet are pushing national economies in that direction.
On the policy side, development of better and more legitimate mechanisms for resolving jurisdictional disputes and dealing with citizen concerns about the security of healthcare data and protection from unwarranted government surveillance are needed. The Snowden case has been a key factor in making data localization a political issue even in advanced Digital Economies such as the EU. To date, the solutions advanced by governments on both sides of these issues have not been adequate. More attention is required for updating mechanisms (e.g. Mutual Legal Assistance Treaties (MLATs)) to the realities of the new Digital Economy.
From Tunis to New York: the IGF and Asia
Facilitators: Adam Peake (ICANN), Dr. Robert Pepper (The Aspen Institute) and Professor Yudho Sucahyo (University of Indonesia).
The entry point to the discussion was that existing institutions for Internet governance, such as ICANN and the UN-based IGF, have a limited mandate and functionality. ICANN’s focus is to oversee the allocation of domain names and IP addresses. While there is some controversy currently over the allocation of international domain names, most of the work is done routinely at the regional level through mechanisms open to participation by all stakeholders.
The IGF process began with the World Summit of the Information Summit (WSIS) in Tunis in 2005 and has evolved into an annual set of meetings devoted to a discussion of key principles surrounding issues such as privacy, cyber security and net neutrality, as well as topical concerns. In some respects, the IGF process is a refinement of the informal management of the Internet developed first by academia and engineering communities. This bottom-up process was designed to identify and air issues rather than substitute for traditional decision-making processes centered on national governments and international organizations.
In Asia, there is a tendency for government to take the lead on political, economic and social policy issues. Participation from civil society, academia and the business community in the IGF process both regionally and globally has been limited compared to North America or Europe. For example, while Indonesia hosted the global IGF in Bali in 2013, the role of the multi-stakeholder community in its national policy process is only now beginning to take root. The situation is similar in Vietnam, Malaysia, Hong Kong, Japan and Korea. While India has a strong civil society tradition, activities by local groups have mostly centered on national development issues. The concerns about net neutrality that have sparked a broad public debate about the nature of Internet access are a recent development.
Despite the weak and emerging role of a multi-stakeholder community in Asia, firm recognition exists for the continuing value of the IGF process. It was pointed out in the discussion that the IGF is now moving from a focus on more narrow technical concerns about the Internet to issues central to the future of the Digital Economy. e.g. data centers and energy, IoT, the environment, healthcare and gender issues. The value of the IGF is its inclusive and open nature that facilitates an interplay among participants, encouraging the development of principles and soft norms that over time may be codified into standards and regulation by governments.
However, the processes of encouraging better policy analysis and the convening of inter-sessional meetings and working groups to help build and lead discussions on complex and controversial issues must be improved. The silo effect created by dividing up the community into civil society, the technical community (where academics are also generally assigned) and the private sector must be reduced. China’s growing presence at the IGF was noted as well as its affirmation that while governments and international organizations should take responsibility for public policy implementations to keep the Internet stable and secure, all stakeholders should have a role in contributing to the future development of the Internet.
TPP and the Digital Economy
Facilitators: Professor Leon Trakman (University of New South Wales), Professor Tomoko Ishikawa (Nagoya University), Professor Peter Cowhey (University of California, San Diego), Andrew Ure (Google) and Professor Makoto Yokozawa (Kyoto University).
Reflecting concerns about the controversy that has erupted in the US, the discussion began with the observation that the TPP may not enter into force until 2018, if at all. Because of TPP’s importance to the future of the Digital Economy, speedy ratification by the 12 partners to the Agreement is a concern. The Agreement contains provisions to:
- Improve Internet access.
- Address the digital divide.
- Protect the interests of suppliers and consumers involved with e-commerce.
- Balance national security concerns with the need for a regional effort against cybercrime.
- Harmonize regulations in areas from financial services to labor mobility.
- Serve as a template and a spur for future agreements targeting the Digital Economy.
The TPP is unusual among trade agreements in that it is a mixture of binding commitments and soft principles. To be properly understood, it must be viewed in its entirety since pledges in some areas are conditioned elsewhere by exceptions and limitations on its applicability. For this reason, there are concerns that TPP does not go far enough in supporting a stable framework for the growth of e-commerce. Much noticed prohibitions against data localization and the disclosure of source code are the subjects of exceptions. Additionally, the task of closely aligning the many, divergent national legal frameworks for protecting personal information is limited to a mere admonition against provisions in these laws judged to be discriminatory against TPP partners.
Such concerns notwithstanding, it was generally agreed that TPP, if ratified, will be an important step forward for the Digital Economy in the Asia Pacific region. First and foremost, TPP is an important milestone in developing a regional framework to promote digital trade because it assures the future creation of precedents in many area. Thus, TPP and the closely associated TTIP (Transatlantic Trade and Investment Partnership) are both elements of a global process to address the many structural changes associated with Digital Economies. By making digital trade equivalent to other trade issues (e.g. agriculture), TPP has allowed negotiators to build necessary compromises across a number of trade-related economic sectors.
There is worrisome backlash in the United States against measures to harmonize the domestic economy with trends in the global economy. However, if the Digital Economy is to prosper, harmonized approaches on privacy, cybersecurity and regulating digital technologies will be necessary. For example, how and where will customs duties on 3-D printer products be enforced/collected when a design is developed in one country, shipped over the Internet and printed in another? TPP is essential to ensuring predictable rules and enforcement for e-commerce.
The benefits of TPP for SMEs are compelling. Once implemented, the agreement will open up access to nearly 40 percent of global trade while the provisions on fair use will provide new opportunities for designers and artists. Significantly, TPP helps change the conversation on the Digital Economy from restriction to the setting of rules and principles on what must remain open. This is particularly crucial for the diffusion of cloud computing.
The implications of TPP are being studied by the three largest economies in the region. Indian business leaders are carefully looking at how TPP might change the regional market for digital goods and services, recognizing that APEC and the Trade in Services Agreement (TISA) will likely follow TPP’s lead. China is closely examining the implications of TPP for e-commerce in the region, since the provisions in TPP are not dissimilar to the provisions likely to be part of China’s domestic regulations.
For Indonesia, TPP is of keen interest since the government is looking to clarify its stance regarding accession to the agreement within the year. The e-commerce provisions dovetail those contained in the e-commerce chapter of Regional Comprehensive Economic Partnership (RCEP) that Indonesia is driving. A separate issue that could slow further accession and implementation are the many changes in national legislation required by TPP. In Malaysia, for example, some 25 major regulations will require amendment or revision, and a careful cost/benefit analysis is currently underway.
Is There an Asian Model for the Internet?
Facilitators: Professor Dave Farber (Carnegie Mellon University), Professor Uday Desai (Indian Institute of Technology at Hyderabad), Professor Abu Bakar Munir (University of Malaya), Professor Xinmin Gao (Internet Society of China), Professor Jiro Kokuryo (Keio University), Professor Toshio Obi (Keio University) and Professor Hiroshi Esaki (University of Tokyo).
The group first took up the question of an “Asian Model for the Internet” from the perspective of how Asia’s development and utilization of the Internet might come to differ from Western practices and what impact this may have. They concluded that, while there are many differences at the margins, Asia’s Internet would not likely diverge significantly from the global model. It was recognized that Asia moving in a different direction from the rest of the world would drive further physical fragmentation of the Internet, an outcome that is in no one’s interest. A global, common model is necessary, but does not rule out certain variations on this theme with an Asian perspective.
Currently, opinion surveys of users generally show that Asians, particularly the youth, use the Internet in the same way as others around the world. For example, some 83 percent of the world views Internet access as a human right. This opinion is shared by 89 percent of Asians. TPP will also help deepen Asia’s connections with the rest of the world as will China’s policy of “one belt, one road” which seeks to connect China via land and by sea with trading partners in Asia, Europe and the Middle East.
Consequently, while Asia will remain quite diverse linguistically, culturally and religiously, the common discipline of the Internet will exert a powerful integrative force to keep Asia connected with the rest of the world. This holds especially true for Japan, as can be seen in the possibility that it may be first country to ratify the TPP, and the current schedule is for it to be presented to the Diet this fall.
Yet, if there is skepticism about the emergence of an “Asian Internet”, what role is foreseen for Asia in building the Digital Economy? What will be Asia’s contribution to Internet governance and the promotion of growth and innovation globally through the diffusion and utilization of digital technologies?
When framed this way, the situation is more nebulous. Regrettably, Asian involvement in Internet governance circles has been quite limited and the centers of scholarship and policy analysis on the Digital Economy are largely outside the Asia Pacific region. Asia’s future role will greatly depend on the success of the next generation of Asians in articulating a compelling vision with respect to the Digital Economy.
Doing so will require a deep awareness and appreciation for the many challenges to the integrity of the Internet in policy areas, such as personal information and the management of cyber space, as well as in supporting greater research and championing wise policies in key areas of the future Digital Economy, including health, education, manufacturing and financial services.
Finally, there is also the need to master not just the engineering characteristics of new technologies, such as cloud computing, big data, IoT and artificial intelligence, but also to understand policy creation and implementation and facilitate effective communication with the broader digital community on these concerns. There was agreement that programs, such as the APRU Digital Economy Summer Seminar, are vitally important for the development of the policy perspective and skills required for the Asia’s digital community to participate actively and constructively in the global discussion on the future of the Digital Economy.